If Freya declares a five-for-one stock split, how many shares are outstanding no
ID: 2766360 • Letter: I
Question
If Freya declares a five-for-one stock split, how many shares are outstanding now? (Do not round intermediate calculations.)
What is the new par value per share? (Do not round intermediate calculations. Round your answer to 3 decimal places, e.g., 32.161.)
If Freya declares a one-for-seven reverse stock split, how many shares are outstanding now? (Do not round intermediate calculations.)
What is the new par value per share? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)
The owners' equity accounts for Freya International are shown here.
Explanation / Answer
number of shares 70000 ( 35000 / 0.50) a-1 ) 5 for 1 stock split Number of shares outstanding after the split = 70000 / 1 * 5 = 350000 a-2) New par value = 0.50 / 5 = 0.10 $ per share b-1) one for seven reverse stock split Number of shares outstanding after the split = 70000 / 7 * 1 = 10000 b-2) New par value = 0.50 * 7 = 3.50 $ per share